Study: Phoenix Could Generate $4.56B by Leasing Sky Harbor International Airport 

Report examining 31 U.S. airports shows Sky Harbor could be worth between $3.19 billion and $4.56 billion via a long-term lease to private airport companies and investors

Reason Foundation

Phoenix could generate $4.56 billion by leasing Phoenix Sky Harbor International Airport, giving the city money to fund other needed infrastructure projects or pay down debt, according to a new Reason Foundation study of U.S. airports. Based on data from previous airport sales and long-term leases around the world, the Reason Foundation report found the airport could be worth between $3.19 billion and $4.56 billion via a long-term lease to a private airport company and investors. After paying off $1.67 billion worth of airport bonds, which would be required by federal law, the city could net up to $2.89 billion from leasing Sky Harbor International.

Phoenix could put that money towards modernizing existing infrastructure such as aging roads and bridges, funding new projects in its long-range transportation plan, or paying down existing debt.

“Many of the world’s best airports are already managed by private companies under similar arrangements, including London’s Heathrow and Gatwick, Athens, Copenhagen, Paris, Rome, and Sydney.” said Robert Poole, author of the report and director of transportation at Reason Foundation. “The long-term lease would be a public-private partnership that would completely protect Phoenix and air travelers by setting specific customer service and performance benchmarks that must be met by the private partner. It would also lay out specific maintenance, upgrades and other investments the company would have to make throughout the lease.”

In July 2021, an unsolicited $17 billion offer to buy Sydney International Airport, Australia’s largest airport, was made by a group of infrastructure investors. Despite the airport’s traffic still being a fraction of its pre-COVID-19 levels, the offer was 26 times the standard multiple of Sydney’s pre-pandemic cash flow. The Reason Foundation study used a 20-times multiple in its “high” value calculations for U.S. airports like Sky Harbor. The news from Australia suggests that infrastructure investors value airports for their long-term prospects, and that the city could get the high-end value—$4.56 billion— in the Reason study or perhaps even more.

The Reason Foundation study analyzed 31 large and medium U.S. airports, finding that Los Angeles International could be worth $17.8 billion, San Francisco International and Dallas-Fort Worth International Airport could each be worth more than $11 billion, and Chicago O’Hare International Airport could be worth more than $10 billion.

The study— “Should Governments Lease Their Airports?”— is available here.

Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason Foundation produces respected public policy research on a variety of issues and publishes the critically acclaimed Reason magazine and its website.

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